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MVC Capital, Inc. Common Stock Message Board

  • jimgggg jimgggg Mar 11, 2010 4:21 PM Flag

    I cannot make the math work

    ETF Connect ( http://www.cefconnect.com/Details/Summary.aspx?ticker=MVC ) shows $12.8 million in Dakota stock held by the fund on 1/31/2010.

    The press release says the fund is getting $38 million and that the price is a 6.2% premium over the stock price as of 1/31/2010.

    Now as I do the math, these three numbers are incompatible.
    Can someone help me here?

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    • I occasionally exchange posts on a private message board with someone who has actually owned DGPC.

      Yesterday, he shared the following information:
      • He purchased his shares in 2004 at $4 per share.
      • DGPC has paid dividends.
      • He believe's that MVC's cost was $5 per share.
      • A tender offer was made in 2007 at $10 per share and he did tender 2/3rds his shares at that time.
      • After the 2007 tender offer, the shares were not allowed to trade except through private placement.

      If one further assumes that MVC collected dividends and fees averaging $0.2825 per share per year (5.65% of their initial investment of $5.00 per share) during the six years prior to their final sale at $18.28 per share then MVC's claim that they earned a 6-Year IRR of 27.7% is highly credible.

      Copy & Paste into Excel:

      =IRR({-5.00,0.2825,0.2825,0.2825,0.2825,0.2825,18.5625})

    • With regard to your statement:

      "The press release says the fund is getting $38 million and that the price is a 6.2% premium over the stock price as of 1/31/2010."

      The Press release does NOT make that claim, it reads:

      "As further described below, the anticipated gross proceeds of approximately $38 million to the Fund resulting from this transaction would exceed the Fund’s current carrying value of its investment in Dakota Growers."

      The operative words are: "current carrying value".

      I find it fascinating that anyone can quote a credible recent stock price for DGPC. It is my understanding that DGPC has not traded (other than private placements) on any exchange since 2007.

 
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